Cuts in Interest rates of small savings account retracted

In a correction in policy, the Central government has revoked its decision announced on Wednesday to slash the interest rates of small savings schemes. Finance Minister Nirmala Sitharaman took to Twitter to announce that the previous orders were “issued by oversight”.

She declared that the cuts in the various schemes would be renounced and further informed in her tweet, "Interest rates of small savings schemes of GoI [Government of India] shall continue to be at the rates which existed in the last quarter of 2020-2021, i.e., rates that prevailed as of March 2021."

Opposition leaders were quick to react to the hiccup, P.Chidambaram criticised the move and tweeted, "Announcement of interest rates on savings instruments for the next quarter is a regular exercise. There is nothing “inadvertent” about its release on 31st March."

Priyanka Gandhi took to Twitter to ask Finance Minister Nirmala Sitharaman and point out if the Centre's overnight reversal on small savings scheme interest rates was due to "oversight" or election-driven "hindsight".

Small savings rates were supposed to be cut by 50-100 basis points in the first quarter of the new fiscal year. The Finance Minister had announced slashing of deposit rates of small savings deposited to 3.5 % from 4 % effective from the new fiscal year starting from April 1st.

This along with reduction in the interest rates for Senior Citizen Savings Schemes was announced to be cut to 6.5% from the previous 7.4%.

The interest rates of Public Provident Fund Scheme were to be slashed to 6.4%, interest rate of Sukanya Samriddhi Account Scheme was cut down to 6.9%. The Kisan Vikas Patra was supposed to be decreased to 6.2%.

The Finance Ministry had said that the interest rate cuts "are in line with overall interest rate movement in the financial system."